Consulting on investment forms under BOT contracts – BOT contract structure

Investment form under BOT contracts (Build-Operate-Transfer) is an attractive solution for investors when participating in public infrastructure projects. With the BOT contracts structure, investors have the right to build and operate the project for a period of time before transferring it back to the state. The following article by Long Phan will provide some information about the form of investment under a BOT contract, as well as the structure of a BOT contract.

What is a BOT contract? What is the form of investment under BOT contracts?

Pursuant to Point a, Clause 16, Article 3, Article 45 of the Law on Investment by Public-Private Partnership 2020, BOT contract is the acronym for Build – Operate – Transfer contract. is a type of contract under a PPP project contract, signed in the form of a document about the State granting rights to investors and PPP project enterprises to implement PPP projects according to the provisions of this Law.

The form of investment under a PPP contract is that the investor or PPP project enterprise is granted the right to build, do business, and operate the project and infrastructure system within a certain period of time; At the end of the term, the investor or PPP project enterprise transfers the project and infrastructure system to the State.

Things to note when investing in the form of BOT contracts

When deciding to invest in the form of BOT contracts, you need to pay attention to the following issues:

• Firstly, it is necessary to clarify the contribution and investment of State budget capital. This helps investors separate which assets are the investor’s assets and which assets are public assets after completing the project.
• Second, investors may be behind schedule and have the project’s construction plan upset when the State clears land to implement BOT projects.
• Third, ensure close work with credit institutions in funding commitments for projects, limit cases of false commitments in BOT contracts with the State due to differences in regulations of credit institutions compared to State regulations.
• Fourth, investors need to pay attention to the payback period.

Structure of a BOT contract

The fields of signing BOT contracts are relatively diverse, with each field having a different contract model. However, the general structure of a BOT contract, based on Article 47 of the Law on Public-Private Partnership Investment 2020, will include:

• Basic information of the signing parties;
• Scope and goals of the project;
• Capital and implementation schedule;
• The technologies and equipment used to complete the project;
• Rights and obligations of the parties, risk provisions;
• Benefits that the parties enjoy such as revenues, prices and costs;
• Cases of contract termination ahead of schedule;
• Provisions on dispute resolution and contract violations;
• Validity of the contract.

Steps to make investment under BOT contracts

Prepared documents

Pursuant to Article 79 of Decree 35/2021/ND-CP, investors when making investments under BOT contracts need to prepare the following basic documents:

• Document requesting transfer of works and infrastructure systems;
• Report on the responsiveness of the project and infrastructure system;
• Other documents as specified in the contract and written agreement.

Procedure for transferring PPP projects using BOT contracts

Based on Clause 1, Article 78 of Decree 35/2021/ND-CP, the implementation sequence of the BOT project includes the following tasks:

Step 1: The enterprise publicly publishes the transfer of the project, infrastructure system, procedures, contract liquidation deadline, and debt payment;

• Submit documents requesting transfer of works and infrastructure systems according to regulations to the contracting agency.
• Implementation time: At least 01 year before the date of termination of the PPP project contract according to the term specified in the contract

Step 2:

• Organize inspection of the quality, value, and condition of works and infrastructure systems according to the principles and conditions agreed in the project contract.
• Prepare a list of transferred assets.
• Make a record identifying damage to the property (if any) to request the project enterprise to carry out repair and maintenance of the property.
• In case the project or infrastructure system meets the requirements, the contracting agency will sign a record of asset transfer.
• Report to the competent authority on the assignment of an agency or unit to operate, do business and maintain works and infrastructure systems according to regulations.
• Implementation time: Within 30 days from the date of receipt of transfer request documents
• Implementing agency: the contracting agency presides over and coordinates with state management agencies specialized in property, financial agencies and other relevant agencies (if necessary)

Step 3:

• Prepare documents and report to the competent authority to decide on establishing public ownership.
• Prepare a plan for handling assets, report to the competent authority to approve the handling plan according to the provisions of law on management and use of public assets.
• Implementation time: At least 30 days before the date of termination of the PPP project contract according to the time limit specified in the contract
• Implementing agency: agency signing the contract.

Investment consulting services under BOT contracts

During the process of researching and preparing to invest under BOT contracts, you may encounter difficulties in investment conditions, regulations and procedures. If you are in need of a professional consulting unit, please contact Long Phan Consulting Company for advice. As a provider of legal services related to investment activities, we will support you:

• Legal analysis of investment activities under BOT contracts.
• Consulting on investment implementation strategies under BOT contracts, responding to arising legal risks.
• Support preparing documents and records when you invest under BOT contracts right from the first stage.
• Representing the owner in the process of resolving arising disputes.
• Consulting on legal issues when implementing BOT contracts.

Above is the entire content Long Phan shared with customers related to the BOT Contracts. If you need detailed advice, please contact the hotline 0906735386 our. Don’t hesitate to contact us for specific, in-depth advice on the status of your business.